L1 Long Short Fund (ASX:LSF) said its portfolio return was a negative 0.2% in the March quarter and a positive 45% over the past 12 months, according to a Monday Australian bourse filing.

The fund said equities initially performed well in January and February, driven by strong commodity prices, before falling sharply in the wake of the conflict in the Middle East, which triggered the worst oil supply shock in history.

It said it was using the period of elevated volatility to identify high quality companies that are now trading far below fair value. These changes include adding to its positions in gold, construction materials, travel-related stocks, and copper while trimming exposure to energy and infrastructure.

L1 Long Short Fund's shares rose past 1% in recent trading on Monday.